- Combination enhances capabilities,
innovation and competition for customers
- Meaningful shareholder value creation
opportunity driven by strategic fit, revenue synergies from new
opportunities, and cost savings
- Expected to be accretive to EPS and FCF
per share in first full year; estimated annual cost savings of $150
million by 2020
- Strong combined cash flow generation
supports financial flexibility and continued execution of capital
deployment strategy
- Conference call scheduled for Monday,
Sept. 18, at 8:30 a.m. Eastern Time
Northrop Grumman Corporation (NYSE:NOC), a leading global
security company, and Orbital ATK, Inc. (NYSE: OA), a global leader
in aerospace and defense technologies, today announced they have
entered into a definitive agreement under which Northrop Grumman
will acquire Orbital ATK for approximately $7.8 billion in cash,
plus the assumption of $1.4 billion in net debt. Orbital ATK
shareholders will receive all-cash consideration of $134.50 per
share. The agreement has been approved unanimously by the Boards of
Directors of both companies. The transaction is expected to close
in the first half of 2018 and is subject to customary closing
conditions, including regulatory and Orbital ATK shareholder
approval.
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“The acquisition of Orbital ATK is an exciting strategic step as
we continue to invest for profitable growth. Through our
combination, customers will benefit from expanded capabilities,
accelerated innovation and greater competition in critical global
security domains. Our complementary portfolios and
technology-focused cultures will yield significant value creation
through revenue synergies associated with new opportunities, cost
savings, operational synergies, and enhanced growth. We look
forward to welcoming Orbital ATK’s talented employees to Northrop
Grumman, and believe our combined strength will benefit our
customers and shareholders,” said Wes Bush, chairman, chief
executive officer and president of Northrop Grumman.
“We are very pleased to announce this agreement with Northrop
Grumman. It reflects the tremendous value Orbital ATK has generated
for our customers, shareholders and employees. The unique alignment
in culture and mission offered by this transaction will allow us to
maintain strong operational performance on existing programs while
we pursue new opportunities that require the enhanced technical and
financial resources of a larger organization. Our employees will
also benefit from greater development and career opportunities as
members of a larger, more diverse aerospace and defense enterprise.
We will remain focused on operational excellence and execution
during and after the transition into Northrop Grumman,” said David
Thompson, president and chief executive officer of Orbital ATK.
Upon completion of the acquisition, Northrop Grumman plans to
establish Orbital ATK as a new, fourth business sector to ensure a
strong focus on operating performance and a smooth transition into
Northrop Grumman. On a pro forma 2017 basis, Northrop Grumman
expects to have sales in the range of $29.5 to $30 billion based on
current guidance. Northrop Grumman expects the transaction to be
accretive to earnings per share and free cash flow per share in the
first full year after the transaction closes, and to generate
estimated annual pre-tax cost savings of $150 million by 2020.
Northrop Grumman has received fully committed debt financing and
expects to put in place permanent financing prior to closing.
Northrop Grumman remains committed to maintaining a solid
investment grade credit rating and will use its strong cash flow to
support debt reduction, while continuing to pay a competitive
dividend and repurchase shares.
Perella Weinberg Partners LP is acting as exclusive financial
advisor to Northrop Grumman and Cravath, Swaine & Moore LLP is
acting as legal counsel. Citigroup is acting as exclusive financial
advisor to Orbital ATK and Hogan Lovells US LLP is acting as legal
counsel.
Northrop Grumman will hold a conference call to discuss the
transaction beginning at 8:30 a.m. Eastern Time on Monday, Sept.
18. Participants should call (877) 600-7013 at least 15 minutes
prior to the scheduled start. A link to the webcast and an investor
presentation can be found on the Investor Relations pages of
Northrop Grumman and Orbital ATK websites at
http://investor.northropgrumman.com and
www.orbitalatk.com/investors. For those who cannot participate in
this call, it will be archived on the Northrop Grumman Investor
Relations page for a limited time. It will also be recorded and
available for replay by phone Monday, Sept. 18, 2017, 11:30 a.m.
Eastern time through Monday, Oct. 2, 2017, 11:59 p.m. Eastern time,
by calling 1-855-859-2056 (domestic) or 1-404-537-3406
(international). Please use conference ID 87599583.
Northrop Grumman is a leading global security company providing
innovative systems, products and solutions in autonomous systems,
cyber, C4ISR, strike, and logistics and modernization to customers
worldwide. For more information, visit www.northropgrumman.com.
Orbital ATK is a global leader in aerospace and defense
technologies. The company designs, builds and delivers space,
defense and aviation systems for customers around the world, both
as a prime contractor and merchant supplier. Its main products
include launch vehicles and related propulsion systems; missile
products, subsystems and defense electronics; precision weapons,
armament systems and ammunition; satellites and associated space
components and services; and advanced aerospace structures. For
more information, visit www.orbitalatk.com.
Cautionary Statement Regarding
Forward-Looking Statements
This communication may contain statements, other than statements
of historical fact that constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. Words such as “expect,” “intend,” “may,” “could,” “plan,”
“project,” “forecast,” “believe,” “estimate,” “outlook,”
“anticipate,” “trends,” “goals” and similar expressions generally
identify these forward-looking statements. Forward-looking
statements include, among other things, statements relating to
Northrop Grumman’s future financial condition, results of
operations and/or cash flows, expected benefits of the proposed
acquisition, the timing of the proposed acquisition and financing
the proposed acquisition. Forward-looking statements are based upon
assumptions, expectations, plans and projections that Northrop
Grumman and Orbital ATK believe to be reasonable when made, but
which may change over time. These statements are not guarantees of
future performance and inherently involve a wide range of risks and
uncertainties that are difficult to predict. Specific risks that
could cause actual results to differ materially from those
expressed or implied in these forward-looking statements include,
but are not limited to: those discussed in this communication,
those identified under “Risk Factors” and other important factors
disclosed in Northrop Grumman’s Annual Report on Form 10-K and from
time to time in Northrop Grumman’s other filings with the SEC; the
possibility that Orbital ATK stockholders may not approve the
proposed acquisition; the possibility that the closing conditions
of the proposed acquisition may not be satisfied; the possibility
that regulatory approvals required for the proposed acquisition may
not be obtained on acceptable terms, on the anticipated schedule,
or at all; the possibility that long-term financing for the
proposed acquisition may not be available on favorable terms, or at
all; the risk that closing of the proposed acquisition may not
occur or may be delayed, either as a result of litigation or
otherwise; the occurrence of an event that could give rise to
termination of the proposed acquisition; the risk that stockholder
litigation in connection with the proposed acquisition may affect
the timing or occurrence of the proposed acquisition or result in
significant costs of defense, indemnification and liability; the
possibility that anticipated benefits of the proposed acquisition
may not be realized or may take longer to realize than expected;
the possibility that costs related to Northrop Grumman’s
integration of Orbital ATK’s operations may be greater than
expected and/or that revenues following the proposed acquisition
may be lower than expected; the effect of the transaction on the
ability of Northrop Grumman and Orbital ATK to retain customers and
retain and hire key personnel and maintain relationships with their
suppliers and customers, including the U.S. Government; responses
from customers and competitors to the proposed acquisition; the
possibility that Northrop Grumman’s business or Orbital ATK’s
business may be disrupted due to transaction-related uncertainty;
the risk that the proposed acquisition may distract Northrop
Grumman’s management from other important matters; the impact of
legislative, regulatory and competitive changes; results from the
proposed acquisition different than those anticipated; and the
other risks and uncertainties detailed in Orbital ATK’s filings,
including its Annual Report on Form 10-K, with the SEC.
You are urged to consider the limitations on, and risks
associated with, forward-looking statements and not unduly rely on
the forward-looking statements including the accuracy thereof.
Forward-looking statements are based on information, plans and
estimates as of the date they are made and there may be other
factors that may cause actual results to differ materially from
these forward-looking statements. Neither Northrop Grumman nor
Orbital ATK undertake any obligation to publicly update or revise
any forward-looking statements, whether as a result of new
information, subsequent events or otherwise, except as required by
applicable law.
Additional Information and Where to Find
It
This communication may be deemed to be solicitation material in
respect of the proposed acquisition of Orbital ATK by Northrop
Grumman. In connection with the proposed acquisition, Orbital ATK
intends to file relevant materials with the SEC, including a proxy
statement in preliminary and definitive form. Following the filing
of a definitive proxy statement with the SEC, Orbital ATK will mail
the definitive proxy statement and a proxy card to each stockholder
entitled to vote at the special meeting relating to the proposed
acquisition. Stockholders of Orbital ATK are urged to read these
materials (including any amendments or supplements thereto) and any
other relevant documents Orbital ATK will file with the SEC in
connection with the proposed acquisition when such documents become
available, including Orbital ATK’s definitive proxy statement,
because they will contain important information about the proposed
acquisition. Investors and security holders are able to obtain the
documents (once available) free of charge at the SEC’s web site,
http://www.sec.gov, and from Orbital ATK by going to its investor
relations web site at www.orbitalatk.com/investors. Such documents
are not currently available.
Participants in Solicitation
Northrop Grumman and its directors and executive officers, and
Orbital ATK and its directors and executive officers, may be deemed
to be participants in the solicitation of proxies from the holders
of Orbital ATK shares of common stock in respect of the proposed
acquisition. Information about the directors and executive officers
of Northrop Grumman is set forth in the proxy statement for
Northrop Grumman’s 2017 Annual Meeting of Shareholders, which was
filed with the SEC on March 31, 2017. Information about the
directors and executive officers of Orbital ATK is set forth in the
proxy statement for Orbital ATK’s 2017 Annual Meeting of
Stockholders, which was filed with the SEC on June 23, 2017.
Information regarding the identity of the potential participants,
and their direct or indirect interests in the proposed acquisition,
by security holdings or otherwise, will be set forth in the proxy
statement and other materials to be filed with the SEC in
connection with the proposed acquisition.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170918005637/en/
Northrop GrummanMedia:Tim Paynter,
703-280-2720Investors:Steve Movius, 703-280-4575orOrbital
ATKMedia & Investors:Barron Beneski, 703-406-5528
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